Ukraine-Russia gas talks stall

BRUSSELS: European Union (EU)-brokered talks to resolve a bitter gas dispute between Russia and Ukraine on Thursday appeared stalled as Moscow demanded that Brussels and Kiev first agree on how Ukraine will pay its huge bill to Moscow.

“The European Commission must reach an agreement with Ukraine over the question of financing,” Gazprom spokesman Sergei Kuprianov told Agence France-Presse in Moscow.

“Otherwise, negotiations make no sense,” Kuprianov said.

At a previous round of talks earlier this month, EU Energy Commissioner Guenther Oettinger had managed to get an outline accord whereby Ukraine would pay $3.1 billion in two installments by the end of the year to settle its outstanding bills to Russia.

In return, Russia would cut the price for deliveries through to March 2015 by some 20 percent to $385 (302 euros) per 1,000 cubic meters.

That deal, however, quickly fell apart, with cash-strapped Ukraine unable to find the money to pay, apparently prompting its recent request for a new EU loan worth 2.0 billion euros.

Diplomatic sources in Brussels said that although Wednesday’s talks, which went long into the night, failed to get a deal, they would continue later on Thursday and Russian officials confirmed this.

“The talks are not over yet. We agreed to continue to work on October 30,” the Ria-Novosti news agency cited Russian Energy Minister Alexander Novak as saying.

“We spent a lot of time discussing the documents. They are still being worked on,” he added.

The European Commission said meanwhile that a press conference planned for Thursday morning had been cancelled. It gave no further details.

EU diplomatic sources said the two sides had agreed early on Thursday to consult their capitals but that a final deal hung on EU financial support.

It is far from certain that Brussels is ready to provide more money, given previous EU commitments to Ukraine which has also secured large loans from the International Monetary Fund.

Russian President Vladimir Putin has previously called on Europe to help Ukraine pay its debt.

Going into the talks Wednesday, Oettinger had said there was only a “50-50” chance of an agreement, noting that Kiev faced real problems in making the payments required.

“Our common ambition is to come to an interim solution, to come to a winter package to solve our security of supply,” Oettinger said.

The EU wants to avoid a repeat of 2006 and 2009 when Russia closed the taps on Ukraine, disrupting deliveries onwards to Europe.

In June as the Ukraine crisis deepened, Russia cut supplies again, demanding that Kiev settle its outstanding bills and pay up front for any future deliveries.

The EU gets about a third of it gas from Russia, of which about a half transits via Ukraine.

The festering dispute has become increasingly difficult to resolve as Kiev has cemented ties with the EU and Russia has shown no sign of returning Crimea, annexed in March, nor withdrawing its support for pro-Moscow rebels in eastern Ukraine.